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Asia-pacific

Iran threatens more EU nations with oil embargo

Text by News Wires

Latest update : 2012-02-20

Iran's deputy oil minister on Monday threatened to cut oil exports to more EU nations, a day after Iran halted exports to France and the UK, in apparent retaliation for the EU's threat to impose sanctions over Iran's nuclear programme.

AFP - Tehran will cut oil exports to more EU nations if they remain "hostile," the deputy oil minister who heads Iran's state oil company said Monday, a day after sales were halted to France and Britain.

Exports to Spain, Greece, Italy, Portugal, Germany and the Netherlands would be stopped, Ahmad Qalebani said, quoted by Mehr news agency.

"Certainly if the hostile actions of some European countries continue, the export of oil to these countries will be cut," said Qalebani, who runs the National Iranian Oil Company.

He added: "In the current market situation, the price per barrel (of oil) will probably reach $150."

Qalebani also said any country wanting Iranian oil would be required to sign "longterm contracts". European companies, he said, would be held to "two- to five-year contracts with no preconditions."

Iran exports about 20 percent of its crude -- some 600,000 barrels per day (bpd) -- to the European Union, most of which goes to Italy, Spain and Greece.

On Monday, the oil ministry announced it had halted exports to France and Britain.

That was in apparent retaliation for an EU-wide ban on Iranian oil that is to come fully into effect July 1 as part of Western sanctions against Tehran's nuclear programme.

Although the ministry's measure was largely symbolic -- France imports only around three percent of its oil from Iran, and Britain less than one percent -- prices for the black stuff soared on fears Tehran could expand its cuts to other European nations.

Iran has been threatening for weeks to cut all oil exports to Europe because of the EU ban, but has thus far held off. Ceasing all exports to the EU would harm its own economy unless it had Asian buyers ready to pick up the contracts.

Oil prices hit nine-month highs on Monday following the move against France and Britain, with London and New York contracts reaching $121.15 and $105.21 a barrel in Asian trading hours -- the highest levels since May 5, 2011.

Later in London midday trade, Brent North Sea crude for delivery in April stood at $120.55 a barrel, up 97 cents compared with Friday's closing level.

New York's main contract, West Texas Intermediate light sweet crude for March, jumped $1.61 to $104.85.

According to the International Energy Agency, Italy sourced 13 percent of its oil, or 185,000 barrels per day, from Iran, while Spain imported 12 percent of its oil needs, or 161,000 bpd, and Greece bought 30 percent of its needs, or 103,000 bpd.

Iran, OPEC's second-biggest exporter after Saudi Arabia, pumps 3.5 million bpd, of which it exports 2.5 million bpd.

Seventy percent of the exports go to Asian countries, China and India especially.

Last Wednesday, the foreign ministry held individual meetings with the ambassadors of France, Greece, Italy, the Netherlands, Portugal and Spain to explain to them that Iran "will revise" oil sales to their countries.

The European Commission responded by saying that, even if Iran did cut its sales to the European Union, it would make little difference as EU buyers were already switching suppliers, particularly towards Saudi Arabia.

The European Union shares US fears that Iran is trying to develop nuclear weapons, despite Tehran's repeated denials.

It has said it will go ahead with its total embargo on Iranian oil in July if Iran does not yield on its atomic programme.

"According to industry sources, the leading European oil companies have slashed their March oil imports from Iran by more than 300,000 barrels per day. This is prompting additional demand for alternative oil types and is thus causing prices to rise," Commerzbank analyst Carsten Fritsch said.

Iran has reacted furiously to a promise by Saudi Arabia -- a US ally and longtime rival in the Middle East -- that it will step in to pump more oil to compensate for any loss to the market from curbed Iranian exports.

Such a move would be viewed as "unfriendly," Tehran warned.

 

Date created : 2012-02-20

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